PRABOWO’S AMBITIONS
Jokowi has handed him a budget that’s in decent shape. The deficit for 2025 is projected to be 2.5 per cent of gross domestic product, safely within the 3 per cent legal limit, the government announced on Friday (Aug 16).
The outgoing leader is considered to have run a sound fiscal policy during his decade in office. Jokowi has been aided in this task by Finance Minister Sri Mulyani Indrawati, who is highly regarded by foreign investors.
The one truly risky move, during the peak of the pandemic, was the central bank’s direct purchase of bonds from the government – a monetisation of debt. That was a practice long shunned in polite economic circles. In a more normal environment, such a step may not be so easily forgiven.
Prabowo, a former top general, has bristled at spending restraints and has pledged a major boost to economic growth. He wants an annual increase in GDP of 8 per cent; the figure has been closer to 5 per cent over the past decade.
It’s hard to know whether he really believes this is possible or merely an expression of his ambition. Every time Prabowo expresses frustration at Indonesia’s narrow path, aides clean up the mess by expressing fealty to the rules and tamping down market anxiety. His choice of finance minister will be critical.
The president-elect has promised to finish Nusantara, the first stage of which was scheduled for completion this year. Jokowi envisages close to 2 million people living and working there by 2045. How deep is this commitment?
“I’ve told him Nusantara development will take 10, 15, 20 years,” Jokowi told reporters last week. “He said ‘that’s not fast enough for me – I want four, five, six years.’ It’s up to him.” Taken at face value, this puts stress on Prabowo’s own agenda, including a $29 billion pledge of free meals for schoolchildren.
